Lack of coverage sustained

Establishing Insurance Coverage Defenses Through Record Searches

Insurance coverage disputes often hinge on fundamental questions: was there actually a policy in effect at the time of an incident? In no-fault insurance cases, establishing the existence or absence of coverage is crucial for determining liability and benefits. When insurance companies claim no coverage existed, they must provide compelling evidence to support their position.

The burden of proving lack of coverage falls on the party asserting that defense—typically the insurance company denying a claim. This burden requires more than bare assertions that no policy existed; insurers must submit admissible evidence demonstrating the absence of coverage. In practice, this usually means affidavits from insurance company employees with personal knowledge of the company’s records, describing systematic searches of those records that revealed no applicable policy.

The evidentiary requirements for establishing lack of coverage serve important purposes. They prevent insurers from avoiding liability through unsubstantiated denials while also recognizing that insurers cannot produce policies that never existed. Courts must therefore evaluate whether insurers have submitted sufficient proof of non-existence of coverage, examining both the qualifications of the affiant and the thoroughness of the record search described. The Appellate Term’s decision in EMC Health Products v. Allstate Insurance Company demonstrates how courts evaluate evidence of non-coverage.

Case Background: EMC Health Products, Inc. v. Allstate Ins. Co.

EMC Health Prods., Inc. v Allstate Ins. Co., 2016 NY Slip Op 50314(U)(App. Term 2d Dept. 2016)

In this no-fault insurance action, plaintiff medical products supplier sought reimbursement for items provided to an individual following a motor vehicle accident. The claim was submitted to defendant Allstate Insurance Company, presumably based on a representation that Allstate insured the vehicle involved in the accident. However, Allstate denied the claim, asserting that it had no policy covering the subject vehicle on the date of the accident.

The case proceeded to cross-motions for summary judgment. Plaintiff moved for judgment on liability, seeking to establish its entitlement to the claimed benefits as a matter of law. Defendant cross-moved for summary judgment dismissing the complaint, relying on its lack of coverage defense. The outcome of these motions turned on whether defendant could establish, prima facie, that no policy existed.

In support of its cross-motion, defendant submitted an affidavit from one of its employees. This affiant described performing a detailed search of Allstate’s records for any policy covering the vehicle in question on the accident date. The affidavit detailed the search methodology and stated that the search revealed no Allstate policy providing coverage for the vehicle on the relevant date. Based on this evidence, defendant argued it was entitled to summary judgment dismissing the complaint because plaintiff’s claim did not arise out of a covered incident.

Jason Tenenbaum’s Analysis:

“In support of its cross motion and in opposition to plaintiff’s motion, defendant submitted an affidavit by its employee, who described the details of a record search which she had performed and stated that her search had revealed that there was no Allstate Insurance Company policy covering the vehicle in question on the date of the accident. We find that defendant’s affidavit was sufficient to demonstrate, prima facie, that plaintiff’s claim did not arise out of a covered incident”

The affidavit herein is valid to demonstrate that there was no coverage.

Legal Significance: Evidentiary Standards for Proving Non-Coverage

The Appellate Term’s decision establishes that properly detailed employee affidavits describing systematic record searches satisfy insurers’ prima facie burden to prove lack of coverage. The court’s analysis focused on the substance of the affidavit rather than imposing rigid technical requirements. The affiant described conducting a search, explained what that search entailed, and stated the negative result—no policy found covering the vehicle on the accident date.

This evidentiary standard balances competing considerations. On one hand, insurers cannot be expected to prove non-existence of something that never existed through traditional evidentiary means. There is no policy to produce, no underwriting file to submit, no premium payment records to introduce. The absence of records proves the point, but demonstrating that absence requires a different type of evidence than establishing the existence of a policy would require.

On the other hand, plaintiffs deserve protection against unfounded denials of coverage. If insurers could defeat no-fault claims simply by stating “we have no record of coverage” without any supporting detail, this would invite abuse. The requirement that insurers submit employee affidavits describing the search process provides some safeguard, as affiants must attest under oath to specific facts about their search methodology and results, exposing themselves to perjury liability if they falsify information.

The decision also implicitly addresses the qualifications necessary for employees to provide such affidavits. The court accepted the affidavit despite not explicitly discussing the affiant’s title, position, or years of experience with Allstate. This suggests that courts focus primarily on whether the affiant had access to relevant records and conducted an appropriate search, rather than requiring affiants to hold particular positions or possess specific credentials. However, prudent practice suggests that insurers should use employees with clear responsibility for maintaining and searching policy records to provide such affidavits.

The ruling’s significance extends beyond no-fault cases to any insurance coverage dispute where the threshold question is whether a policy existed. The same evidentiary standard applies whether the claim involves no-fault benefits, liability coverage, or other insurance benefits. Insurers asserting lack of coverage must consistently provide detailed affidavits describing record searches, regardless of the type of coverage at issue.

Practical Implications for Coverage Disputes

For insurance carriers defending no-fault claims on lack of coverage grounds, this decision provides a roadmap for establishing prima facie entitlement to summary judgment. Insurers should ensure that affidavits from employees include several key elements: identification of the affiant’s position and access to company records; description of the specific records searched (e.g., policy databases, underwriting files, vehicle identification number searches); explanation of the search methodology employed; and clear statement of the negative result.

The decision also counsels insurers to maintain searchable records that can be systematically queried to confirm or deny coverage. Modern database systems facilitate such searches, but insurers must ensure that searches are comprehensive. An affidavit stating “we searched our current policy database” may prove insufficient if historical policies were maintained in separate systems not searched. Thorough searches examining all potential sources of coverage information strengthen the affidavit’s credibility and reduce the risk that plaintiffs can defeat the prima facie showing by identifying unchecked records.

For plaintiffs opposing lack of coverage defenses, the decision highlights the need to scrutinize insurers’ affidavits for gaps or deficiencies. Plaintiffs should examine whether the affiant adequately described the search process, whether all relevant records systems were searched, and whether the affiant had sufficient knowledge and access to conduct a comprehensive search. Additionally, plaintiffs may counter insurers’ prima facie showings by submitting evidence that coverage did exist—such as insurance identification cards, policy declarations pages, or premium payment receipts—creating triable issues of fact that defeat summary judgment.

The case also affects pre-litigation investigation and claim submission practices. Medical providers and other no-fault claimants should verify coverage before rendering services or, at minimum, before investing significant resources in litigation. When patients provide insurance information, providers should confirm coverage directly with insurers before proceeding with substantial treatment. While this verification may not prevent coverage disputes in all cases, it reduces the risk of providing services to uninsured individuals and then discovering non-coverage only after investing time and money in litigation.

Finally, the decision underscores the distinction between lack of coverage defenses and other insurance defenses. Coverage defenses address whether any policy existed that could potentially cover the claim, while other defenses (such as late notice or lack of medical necessity) accept that coverage exists but challenge whether the specific claim should be paid. This distinction matters procedurally because coverage defenses can be raised at any time and cannot be waived through failure to timely disclaim, whereas most other defenses face preclusion if not properly and timely asserted.

Related Articles

• Understanding insurance policy interpretation and coverage analysis
• When coverage defenses defeat otherwise valid claims
• Distinguishing coverage defenses from precludable defenses
• Establishing prima facie entitlement through business records
• New York No-Fault Insurance Law